S-adenosylhomocysteine hydrolase (SAHH) is the only enzyme known to cleave S-adenosylhomocysteine (SAH), a product and an inhibitor of all S-adenosylmethionine-dependent transmethylation reactions. Xenopus SAHH is a nuclear enzyme in transcriptionally active cells and inhibition of xSAHH prevents cap methylation of hnRNA [Mol. Biol. Cell 10 (1999) 4283]. Here, we demonstrate that inhibition of xSAHH in Xenopus XTC cells results in a cytoplasmic accumulation of the shuttling hnRNPs, while xSAHH itself remains in the nucleus. The functional link between xSAHH and mRNA cap methylation is further supported by a physical association between xSAHH and mRNA(guanine-7-)methyltransferase (CMT). We show by co-immunoprecipitation of tagged proteins that both enzymes interact in vivo. Direct interaction in vitro is shown by pull-down experiments that further demonstrate that the N-terminal 55 amino acids of xSAHH are sufficient for binding to CMT. Since CMT is known to bind to the hyperphoshorylated C-terminal domain (CTD) of its large subunit of RNA polymerase II, we have studied the co-localisation of RNA polymerase II and xSAHH in oocyte nuclei. Immunolocalisation on spreads of lampbrush chromosomes shows xSAHH on the loops of the transcriptionally active lampbrush chromosomes, in Cajal bodies and in B-snurposomes, the nuclear compartments that are most likely engaged in storage and recycling of RNA polymerase II and its cofactors. We therefore suggest that a subfraction of the nuclear xSAHH remains associated with the RNA polymerase holoenzyme complexes, also while these are not actively engaged in transcription.